Correlation Between IShares Small and SPDR Russell
Can any of the company-specific risk be diversified away by investing in both IShares Small and SPDR Russell at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining IShares Small and SPDR Russell into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Small Cap and SPDR Russell 1000, you can compare the effects of market volatilities on IShares Small and SPDR Russell and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in IShares Small with a short position of SPDR Russell. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Small and SPDR Russell.
Diversification Opportunities for IShares Small and SPDR Russell
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between IShares and SPDR is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding iShares Small Cap and SPDR Russell 1000 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Russell 1000 and IShares Small is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on iShares Small Cap are associated (or correlated) with SPDR Russell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Russell 1000 has no effect on the direction of IShares Small i.e., IShares Small and SPDR Russell go up and down completely randomly.
Pair Corralation between IShares Small and SPDR Russell
Given the investment horizon of 90 days iShares Small Cap is expected to generate 2.57 times more return on investment than SPDR Russell. However, IShares Small is 2.57 times more volatile than SPDR Russell 1000. It trades about 0.25 of its potential returns per unit of risk. SPDR Russell 1000 is currently generating about 0.44 per unit of risk. If you would invest 3,188 in iShares Small Cap on September 3, 2024 and sell it today you would earn a total of 385.00 from holding iShares Small Cap or generate 12.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Small Cap vs. SPDR Russell 1000
Performance |
| Timeline |
| iShares Small Cap |
| SPDR Russell 1000 |
IShares Small and SPDR Russell Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Small and SPDR Russell
The main advantage of trading using opposite IShares Small and SPDR Russell positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Small position performs unexpectedly, SPDR Russell can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in SPDR Russell will offset losses from the drop in SPDR Russell's long position.| IShares Small vs. Horizon Kinetics Inflation | IShares Small vs. Virtus ETF Trust | IShares Small vs. iShares MSCI USA | IShares Small vs. Pacer Cash Cows |
| SPDR Russell vs. SPDR Russell 1000 | SPDR Russell vs. SPDR MSCI USA | SPDR Russell vs. SPDR MSCI EAFE | SPDR Russell vs. SPDR SSGA Small |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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